Despite strong growth, banksí share of life insurance sales appears stuck at
about 2% of total life insurance production in the United States, according to
industry sources.

At first glance, the sale figures seem respectable. In the first half of last
year, U.S. banks sold $646
million in new life premiums, up sharply from $124 million in the first half of
2000, according to data from Kenneth Kehrer Associates,
Princeton, N.J.

But a closer look shows that most of those sales were for single-premium
policies, a product purchased by wealthier investors, not the middle market
customer banks need to pursue to make significant advances in life insurance.

In fact, first-year recurring premium life sales in banks grew from $45 million
to only $104 million from the first half of 2000 to the same period in 2004, Kehrer data shows.

"Only about half of consumers we surveyed seem to know they can buy life
insurance at a bank," says Greg Grzywacz, senior
bank research analyst for LIMRA International, Windsor, Conn. "This has
hardly changed in several years, although consumers who are aware banks sell
life insurance have become more likely to consider a bank if they need
it."

Many consumers, too, doubt a bank is the right place to buy life insurance,
says Grzywacz. Among their concerns: whether the bank
has sufficient expertise and whether the price is competitive with policies
offered by career agents.

A few even believe that when a bank offers life insurance, itís underwriting
the policies, LIMRA found, and that can undermine their confidence in the
product.

"Increasing the number
of people who understand an insurance company is underwriting bank-sold life
insurance is likely to grow the number who would be willing to buy it from a
bank," says Grzywacz.

"A bank is a totally different environment than the typical career agency
in the length of time the advisor spends with the customer," adds Greg Vacca, a partner with CoreLINK
Group LLC, Sedona, Calif., a third-party marketer that helps
banks sell life insurance. "The average bank
appointment is a single one-hour appointment vs. two, two-hour appointments for
an agent."

Most insurance in banks is sold by investment reps, whose primary business is
the sale of investment products, Vacca adds.
"So, when it comes to insurance, the first big obstacle is they donít know
what to sell: term, a wealth-transfer product, or whatever. The paperwork is
different, too. So, reps just stay away from it."

"A lot of bank reps donít sell life insurance because after they take an
application, it goes into a back room, and then they canít keep track of it,"
says Richard Starr, chairman and CEO of the Financial Institutions Group, a
consulting firm in Sammamish, Wash. "And the not-taken rate is high
because it just takes too long to process."

For banks to break through and capture a significant slice of
life sales, a number of changes need to happen, experts agree. Banks and
insurers need to work together to:

Develop co-branded products and services. Although federal rules mandate
that banks emphasize insurance is not a guaranteed bank product, that shouldnít
stop them from conspicuously sharing a brand identify, says Grzywacz.

A recent LIMRA study found that consumers seem to be more receptive to buying
life insurance at their bank if they know a life insurance company is
manufacturing it, he notes. "It would help if banks made a bolder effort
to publicize their insurance partners," Grzywacz
concludes.

Simplify the bank sale. "Banks have to find a way to continue to
work with their life insurance partners to make the sale more transactional, to
simplify sales to make them quicker," he says.

As an upshot of co-branding, Grzywacz believes many
banks might need to reduce the number of carriers they work with.

"People often look to Europe for success
with bancassurance," he says. "Because the
bank and insurer are often both parts of conglomerate there, you wind up with
banks selling only one insurance company. Having fewer partners just simplifies
things so greatly, and I think thatís overlooked."

Sell the agent. One of things middle market consumers are wary about is
the bankís expertise, Grzywacz says. "In
addition to advertising and plugging the availability of life insurance, the
bank needs to market the agent," he adds.

Automate the process. Another barrier is the length of time it takes to
get an insurance policy approved. Bank customers are likely to be familiar with
annuities and mutual funds, which require no waiting, observers point out.
Buying life insurance, which may take weeks to process, is not something they
get used to quickly.

"The bank has to concentrate on simplifying the cumbersome paper
process," says Starr, who believes technology is coming to the rescue with
solutions that werenít available even a year ago. New software and online
platforms promise to automate, streamline or eliminate paperwork and put
control of application tracking in the hands of bank advisors, he says.

These applications let the advisor fill out an application on screen, send it
straight to underwriting, and use artificial intelligence to help screen the
applicant and to eliminate submissions that are unlikely to be accepted.

Vacca, whose firm provides its bank clients with a
system for processing life applications online, predicts such technologies will
encourage bank sales managers and reps to sell more life insurance by making it
easier to do so.

He claims that an automated system likeCoreLINKís can be 90% accurate in predicting whether an
applicant will qualify for a life policy. So, needless applications are
reduced, while those submitted are likely to be processed quickly.

Underwriters say half of business they get from bank reps is incomplete, Vacca says. When advisors leave something off an
application or check the wrong box, they have to go back to the customer and
get an amendment signed. Such delays often kill the sale.

"Our goal is to have fully underwritten products written in as little as
15 days instead of as much as 8 weeks," says Vacca.
"Reps donít want to sell if it takes 90 to 100 days, and then they find
out it was declined. Insurance companies donít want to take it that long,
either, because it increases the number of not-takens.
By shortening underwriting, the number of taken policies goes up significantly.
Itís a matter of having complete, accurate information."

Using CoreLINKís system, for instance, one insurer
can approve a $250,000 term life policy within 15 minutes right in the bank, Vacca says. Costlier or more complex life products may take
only 4 or 5 days to approve because of the efficiencies available through
online automation.

Automation also assures that applications are complete and error-free. And it
helps satisfy compliance needs. CoreLINKís system
leads the advisor step by step through all forms, including state-mandated
suitability disclosures required for a given customer.

Perhaps the biggest advantage of an automated system is its ability to provide
real-time tracking of business, Vacca says.

"A lot of bank sales managers donít encourage reps to sell life insurance
because the sale takes so long, and they never know its status," says Vacca. "They get a daily report on sales of mutual
funds and annuities, but on insurance sales, they are lucky to see it
monthly."

LIMRAísGrzywacz thinks
banks should focus on selling insurance to younger, less affluent consumers in
the hopes of retaining their business as they mature.

"Banks are good at segmenting their markets," he says. "They
ought to take advantage of the work they do to hone in on younger consumers."

One tactic that might pay off: free financial planning. Grzywacz
sees this as more of a service, not a sale, but one that could lead to more
sales of financial products, including life insurance. Financial planning
software is readily available that would allow bank advisors to develop a
usable plan in a short time for a customer, he notes.

Mid-market consumers told LIMRA theyíd be more comfortable buying life
insurance from an agent than a bank. Getting them to see things differently
requires action by both banks and carriers, Grzywacz
says.